Unless markets bounce back, I imagine next quarter results too will probably not be too great. While AMC and broking business stands on strong footing, the fund based segment is again likely to show some red because they have to now show MTM gains/losses each quarter. HFC remains a question mark and while they have provisioned a huge sum of money but there is no evidence that asset quality will improve. However, they seemed to have really slowed down the disbursement until it all comes together which is great. Finally IB business also seems to have slowed down.
I have been tracking this company for 3 years for an investment opportunity but didnt get one because of expensive valuations at peak profit. Also, the sudden surge of flows into equity MF’s and discretionary investment schemes post demoni has also made me cautious. Overall, I feel it is a good business and the steps taken by management will certainly reduce the cyclicality of the business. Despite all the talk of low financialisation and low penetration of equity as a percentage of savings, I would ideally like to wait for the time when there is a bit more panic on dalal street and people are exiting their PMS investments and stopping SIP’s as opposed to today where everybody seems quite hung ho and a lot of money seems to be flowing in despite corrections. Such an opportunity presented itself in 2013 but we havent seen it since. Such a situation will provide an amazing entry point to buy in with good conviction! It might come, it might not. Until then, there is a large stock universe with steady compounders available! Mistakes of omission tend to be less painful than mistakes of commission!
In the meanwhile, I am more comfortable with HDFC AMC which is significantly “smoother” through cycles as evidenced by growth in profits even in 2013 and 2014. Obviously, it also means having to pay up.
It would be good to have some views!